TA X F A C T S H E E T 0 1
A tax plan for small business
Small businesses are the engine room of our economy. They are the home of Australian enterprise and opportunity
and they are where many big ideas begin. The Government will reduce the tax burden, and increase access to
concessions, for small businesses from 2016.
Lower taxes
The Government will back small businesses by reducing their tax rate to 27.5 per cent, starting with businesses with a
turnover of less than $10 million on 1 July this year.
The Government will decrease the tax rate for all companies to 25 per cent by 2026-27.
As many small businesses are not companies, the Government will also extend the unincorporated tax discount to
unincorporated businesses with annual turnover of less than $5 million and increase the discount to 8 per cent on
1 July 2016, up to a maximum value of $1,000. After the initial increase, the discount will be increased in phases to a
final rate of 16 per cent in 2026-27.
Over 3 million businesses will gain access to either the lower tax rate or higher discount in 2016-17.
Expanding access to small business tax concessions
The Government will extend access to a number of
small business tax concessions by increasing the
threshold for these concessions to $10 million, up from
the current $2 million threshold. This will provide over
90,000 businesses with access to a range of small
business tax concessions.
From 1 July 2016, all businesses with annual turnover
of less than $10 million will have access to:
• simplified depreciation rules, including immediate tax
deductibility for asset purchases costing less than
$20,000 until 30 June 2017 and then less than $1,000;
• simplified trading stock rules, giving businesses the
option to avoid an end of year stocktake if the value
of the stock has changed by less than $5,000;
• a simplified method of paying PAYG instalments
calculated by the ATO, which removes the risk of
under or over estimating PAYG instalments and the
resulting penalties that may be applied;
• the option to account for GST on a cash basis and
pay GST instalments as calculated by the ATO; and
• other tax concessions available to small business
currently, such as the Fringe Benefits Tax
concessions (from 1 April 2017, the beginning of
the next fringe benefits tax year) and immediate
deductibility of professional expenses.
These threshold changes will not affect eligibility for
the small business capital gains tax concessions, which
will only remain available for businesses with annual
turnover of less than $2 million or that satisfy the
maximum net asset value test.
Lower taxes and expanded access to tax concessions
will mean increased opportunity to grow a small
business, employ more Australians and increase wages.
TA X F A C T S H E E T 0 1
Budget impact
Increasing the turnover thresholds for the small business
tax concessions is expected to cost $2.2 billion in
revenue over the next four years.
Reducing the company tax rate to 27.5 per cent for
incorporated businesses is expected to cost $2.7 billion
in revenue over the next four years.
Increasing the rate of the unincorporated tax discount is
expected to cost $450 million in revenue over the next
four years.
Reducing Tax on Enterprises
Corporate tax and unincorporated tax discount schedule: rate and turnover
2015-16
2016-17
2017-18
2018-19
2019-20
2020-21
2021-22
2022-23
2023-24
2024-25
2025-26
2026-27
Company tax
28.5%
<$2m
27.5%
<$10m
27.5%
<$25m
27.5%
<$50m
27.5%
<$100m
27.5%
<$250m
27.5%
<$500m
27.5%
<$1bn
27.5%
all
27%
all
26%
all
25%
all
Unincorporated
tax discount
($1,000 cap)
5%
<$2m
8%
<$5m
8%
<$5m
8%
<$5m
8%
<$5m
8%
<$5m
8%
<$5m
8%
<$5m
8%
<$5m
10%
<$5m
13%
<$5m
16%
<$5m